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Winter storm damage means big biz for insurance claims

The great polar vortex winter of 2014 finally appears to be over, but dozens of local businesses and homeowners are still dealing with the aftermath of insurance claims for burst pipes, water and ice damage — and collapsed and leaking roofs.

Insurance claims consultants, adjusters, brokers, emergency cleanup companies and restoration contractors haven’t seen this kind of winter with the magnitude of insurance losses in decades.

“In 20 years, we have never experienced a winter like this. We had twice as many claims in January and February than we normally do,” said Ethan Gross, co-owner of Globe Midwest Adjusters International Inc., a Southfield-based public insurance adjustment firm.

“We are very busy with frozen pipes and fires (caused by) people trying to warm up apartments or stores with alternative means,” said Gross, whose company primarily assists businesses and homeowners with receiving maximum payouts on their claims.

Globe Midwest this year has handled 29 cold weather-related claims, mostly burst pipes that caused water damage, compared with seven in 2013 and five in 2012.

While insurance claims losses for Southeast Michigan this year were unavailable, winter storms nationally just from Jan. 1 through Feb. 21 totaled $1.5 billion, according to the Insurance Information Institute. In 2013, winter storms caused $1.9 billion in losses, said Munich Re.

The city of Detroit also has faced major problems with burst water mains and pipes, which led to an outbreak of potholes and sinkholes that collapsed several major streets. There were more than 312 water-main breaks across the city, according to the Detroit Water and Sewerage Department.

Ron O’Neill, senior claims consultant with Aon, a Southfield-based insurance broker, said insurance claims for Southeast Michigan businesses are expected to total six times more than last year. He said numbers for this year are still being tallied.

“The No. 1 claim we are seeing is roof collapses, followed by burst pipes, (and) loss of utility services from ice and wind storms,” O’Neill said. “The sheer volume of snow, 90.7 inches, three short of the record, and the accumulation of ice, has collapsed roofs.”

O’Neill said the extended period of cold weather — the average temperature of 20.9 degrees for December through February was the coldest in 36 years — caused water pipes in outside walls to freeze and burst.

Tim Wise, operations director with Troy-based ServiceMaster Don’t Panic, said he hired two workers last fall to prepare for the busy winter season. The emergency response cleanup company employs 10 full-time technicians and uses another 14 workers on a part-time basis, he said.

“We were lucky we hired extra people. We are four times busier than last year,” said Wise. “We are the first responders. We have shown up when firefighters are doing their thing. It is our job sometimes to shut off the water and extract standing water from the building, remove wet carpet and dropping ceiling tiles or drywall.”

Besides physical loss to buildings, O’Neill said, manufacturing, retail or hotel business can suffer income loss that factors into the insurance claim.

“It can take three to six months for a manufacturing facility with a significant portion of a roof collapse to rebuild and come back,” O'Neill said. “Most have emergency contingency plans to move production to other facilities. Sometimes they go to competitors to produce their product.”

Gross said businesses that have disaster plans in place tend to fare better in times of emergencies than others.

“There will be lost income for businesses that have storm losses,” Gross said. “The quicker they file their claim and move to operate out of a temporary location, the better off they are.

“It is a boom for certain industries — insurance restoration and mitigation businesses. They are busier than ever.”